Christian Osgood and Cody bought a 38-unit building for $2 million with only 15% down by using seller financing instead of a bank loan. They secured a $1.7 million seller-financed note and outline a three-step framework for investors: commit to multifamily, run the numbers, and network to find deals directly from owners.
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Hello YouTube, this is Christian, and today we're gonna be—
You stole my line!
Well, Cody, not quite. We are now joining the YouTube channel with both Cody and I officially. Now that we've taken on another 38 units together, we wanted to share the adventures with everyone between the two of us.
I suppose that's okay.
Thank you, Cody. Now that the adventure is a joint venture, we have different perspectives on things, different points of view, and we wanted to do this together. Today's video is going to be about seller financing and how to creatively pick up small to mid-sized multifamily.
Yeah, and we love that space. That is our space. I mean, we're not going and buying 400 units, we're not buying 100-unit complexes, but we're not going to even look at single-family houses. And so we found this little niche between 10 and 40 apartment units where there's just a level where there's no competition compared to the other spaces. Tons of people are trying to go syndicate 100+ unit complexes, and there are so many people, as you know, that are trying to buy the 1 to 4 unit complexes where you got that single family, duplex, triplex, fourplex. Christian's been through that, and there's a lot of competition with the duplexes. And so we are playing in this new space. But Christian, can you chat a little bit about the seller financing and really the 38 in general? Not the 38, it's not going to be everybody's deal, but It's a good example of what you can do.
Yeah, so for the 38, I mean, that's a property that had a $2 million purchase price. I know that was sitting on the market for a while, and everyone who tried to negotiate negotiated on the price. In fact, it went under contract for a lower price than we bought it for at one point. However, your options are either price or terms when you're negotiating. Everyone went after price. We took a different tactic. Cody originally found and brought the deal together. Cody, what did you do to put that together and get an offer accepted?
Really what it came down to is I had to figure out what the seller was looking for. Now, let's take a step back for a second. You look at a property and they may be looking for price, they could be looking for terms. Terms means an owner contract. And I found that they'd been beat up so many times on price that They just wanted their number, and their number was phenomenal. Like, granted, the property needs a lot of work.
A lot.
A lot. We've already had floods. We mentioned that in our Cashflow Kittens video. That Cashflow Kittens somewhere over there. But, uh, we've really had to work on this, and it's going to be a process. And that's why we're creating that YouTube section where you're gonna have a playlist of all the things that we're doing with that property. But granted, it is a piece of work. And so we got it for a great price. Everybody kept trying to beat up the price though. We didn't do that. We gave them their price and in return we got to finance it with lower percentage money down. Typically on something like this you'd be around 30-35% down. And what did we have to do?
Well, we were able to pick that up at 15%. The sellers were kind enough to lend us $1.7 million of the $2 million. That all of a sudden makes it much more attainable. If you're like Cody and I and you're not in a position where banks are just going to hand you $2 million to buy a beat-up property, you need to get a little creative. These sellers made it possible. All we had to do was reach their goals. All they wanted to make out of this was $10,000 a month in recurring income. We negotiated an interest rate that made sense for us and added principal to that that pays down our loan that makes sense for them. That's all that we had to do to put together this deal is have that conversation of This is what we need. What do you need? With seller financing, tell us more about this because everything is negotiable, right?
Yeah, so it's actually not like a bank. They don't have set margins. You get to really create the note how you want to see it fit. And so if you add extra debt paydown, if you add partial payments in the future, granted you have an attorney draft all of this, you are not writing this out on a napkin, but you're able to have it structured however both parties see fit. And so there's really 3 steps though to making this thing happen for yourself, whether it's 38 units like we did, or you go and maybe you take down a deal like my first deal, which was 12 units. Regardless of the size, if you play in this niche, there's 3 steps. Number 1, you got to make a commitment. You have to make a commitment that you're going to do this. I've got a buddy who was looking at single-family homes online, they're in Missouri, and he typed in his email. It's like, what are you doing? You don't want to play with single-family houses, you're playing with apartments. And so kind of slapped him on the wrist for that one. But if you want to play the apartment game, play the apartment game. Don't look at distractions. And then number 2, you need to do the math. Christian, let me just ask a quick question. Are there apartment buildings between 10 and 40 units in the United States with no debt?
Well, there was one that was 38 units that I saw recently, but absolutely yes, they're all over the place.
Okay, boom. So Now you don't actually have to do step 2 because you know there are properties out there that you can do this with. And then step 3, you need to take action on that. You need to start doing the actual work and making those connections. But Christian, where do you find people that own real estate?
Well, I mean, you can find them on the MLS like we did. We found that listed online that had been on market for a while. You can network with brokers, other investors, and meeting— the more you get out in front of people who work and own Real estate, the more connections you're gonna have, the more people you find who own real estate that you might want to own yourself.
Phenomenal. All right, well, that's today's video. If you guys haven't already and you're new to the channel, make sure to like, subscribe, and comment to follow along with the journey. We are gonna be documenting that 38-unit. That is gonna be a piece of work. Mm-hmm. But you are gonna get to be there every step of the way. And really our objective with that is to show you that this is possible. We're gonna show you everything we're doing from building out relationships with contractors, what the work looks like, getting a unit re-rented so that you have the confidence and the knowledge on how to do it yourself.
If you have questions on seller financing or anything we talked about in this video, comment below. Either Cody or myself will respond to you.
